CCB International indicated that Frog Prince (1259.HK)'s performance for the first half of 2011 was in line with the bank's expectations, with gross margin rising 3.9 percentage points to 40.3%, mainly driven by improved product portfolio and an increase in average sales prices. It is expected that the second half of the year will continue with the support of increased sales of high-margin products; however, in response to the increase in promotion expenses and the expectation that the effective tax rate will increase from 12.5% to 16%, the target price fell slightly to HK$4.4 (12 times the 2012 price-earnings ratio); however, it is thought that the target price fell slightly to HK$4.4 (12 times the price-earnings ratio for 2012); The stock is undervalued, again Outperforms market ratings.

Frog Prince closed at HK$2.45 yesterday.